Meeting documents

To consider a report by the Pension Fund Administrator.

The Committee considered a report by the Fund Administrator on the progress to date in implementation of the Full Business Case (FBC) for the Brunel Pension Partnership, as approved by the Committee at its meeting on 9 January 2017.

The Fund’s internally managed UK equities’ portfolio and the Fund’s global equities under the management of Allianz successfully transitioned to Brunel portfolios in July 2018.  The Fund’s allocation to active UK equities would transition to Brunel from the management of AXA Framlington before the end of November 2018. 

In total, approximately £900 million of investments would then have transferred to Brunel’s management in the first eight months of operation, representing 30% of the Fund’s total assets.  Fee savings to Dorset from the three transitions to end of November 2018 were estimated to be approximately £1.3m in a full year. 

Emerging Markets equities was the next portfolio to be developed by Brunel.  The Fund had a 3% (£90m) allocation to emerging markets under the management of JP Morgan.  The expectation was that this would transition in full to Brunel, but with transition not expected to complete until September 2019.

In private markets, Brunel was still at the market research stage for Private Equity, but there had been good progress in Secured Income with two thirds of Dorset’s  allocation of 2% (£60m) committed to underlying funds.  However, it was expected that it would be some time before these commitments were drawn down due to the nature of the asset class.

The FBC assumed that substantially all the new Brunel portfolios would be ready for investment within the first two years of operation.  From the experience of the first transitions it was felt that this timetable was unrealistic. The level of resources needed by Brunel was also underestimated, with concerns from the clients that piecemeal increases to budgets were being sought by Brunel.  Therefore, a full review of the FBC was required.

As a result of this review, the transition plan had been stretched to three years and it was proposed to increase Brunel’s budget from £7.8m this year to £10.4m in 2018/19, with Dorset’s share up from approximately £800k to £1m.  Clients should now have a much greater level of certainty in the transition plan and funding requirements. Client priorities were also taken into consideration in the revised transition plan.

The Vice-Chairman asked for confirmation of the impact of extending the transition plan on the break-even point for Dorset from the pooling project, and that representatives from Brunel be invited to the next meeting of the Committee.  The Chairman asked that minutes of the meeting of the Brunel Oversight Board on 1 November 2018 be circulated to members of the Committee as soon as they were available.

Resolved

1. That the progress in implementing the project be noted.

2. That officers provide a summary of fee savings achieved and transition costs incurred for the transitions to date.

3. That officers confirm the impact of extending the transition plan on the break-even point from the pooling project for the Fund.

4. That representatives from Brunel be invited to the next meeting of the Committee.

5. That the minutes of the meeting of the Brunel Oversight Board on 1 November 2018 be circulated to members of the Committee as soon as they were available.